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3 Minutes to Read TOKYO, Japan (Reuters) – According to the Reuters Tankan poll, Japanese manufacturers’ business optimism surged to a more than two-and-a-half-year high in July, as the country’s export-driven recovery remained intact thanks to strong global demand. FILE PHOTO: On November 19, 2015, women at Sharp Corp’s Tochigi facility in Yaita, north of Tokyo, assemble an Aquos television. Reiji Murai/Reuters According to the poll, which monitors the Bank of Japan’s (BOJ) closely regarded tankan quarterly survey, service-sector sentiment turned bleak as enterprises coped with the aftermath from the coronavirus epidemic. In the survey, a manager from a machinery manufacturer commented, “The world economy is showing indications of recovery from the impact of the coronavirus pandemic.” “However, the picture remains uncertain, since our customers are deferring corporate investment choices due to shrinking budgets.” The Reuters Tankan sentiment index for manufacturers jumped to 25 in July from 22 in June, the highest level since November 2018, according to a poll conducted from June 30 to July 9. From a flat reading the previous month, the service index dropped to minus 3. (Click here for a complete table of the outcomes.) The readings of the Reuters Tankan index are determined by subtracting the percentage of respondents who say things are bad from those who say they are good. Optimists outnumber pessimists in a positive reading. Strong confidence among automobile, chemical, and metal product manufacturers boosted manufacturers’ spirits, offsetting unfavorable conditions in the textiles and paper industries. The survey of 503 large and mid-sized businesses, of whom 257 responded on the condition of anonymity, comes ahead of the BOJ’s policy meeting on July 15-16. Business optimism increased to a two-and-a-half-year high in the BOJ’s own “tankan” business survey released this month, with service-sector sentiment turning positive for the first time in five quarters. As a new state of emergency for Tokyo, which will last until August 22, threatens to harm consumer and business mood, the BOJ is expected to lower this fiscal year’s economic growth predictions in new quarterly projections. The Reuters Tankan poll highlighted the agony that the health-care crisis was causing businesses, particularly those in the service sector. “Overall customer behavior is slow,” a food producer’s manager noted in the poll, “since attitude isn’t changing due to anti-coronavirus actions.” Despite the fact that they are suffering from long-term restrictions, the Japanese government predicted earlier this month that the economy will recover to pre-pandemic levels by the end of the year, owing to strong exports and a boost in consumer spending from improvements in vaccines. Manufacturers’ business confidence was predicted to climb to 28 in October, while service-sector firms’ confidence was expected to rise to 8, which was a somewhat lower projection for three months out than the previous month, according to the survey. Daniel Leussink contributed reporting, and Simon Cameron-Moore edited the piece./nRead More

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